Loans and Government Schemes for Salon Owners: Mudra, PMEGP, Stand-Up, CGTMSE

Most salon owners who ask about "government loans" are told about four schemes, and the advice is usually a year or two out of date. Limits have gone up, one scheme has ended, and the rules on collateral changed in April 2026. This guide sets out what is actually available to a salon, a beauty parlour or a barber as of 31 October 2026, what each one really gives you, and how to apply without paying anyone for it.

Schemes change with each Budget. Check the current terms with your bank or the scheme's own website before you apply.

#Which loans and schemes can a salon use in 2026?

Four routes fit most salons: a Mudra loan, a PMEGP loan with a subsidy for a new unit, an ordinary bank loan backed by a CGTMSE guarantee, and, for barbers working on their own, PM Vishwakarma.

#How do Mudra loans work for a salon?

Mudra loans are ordinary bank loans for small non-farm businesses, made collateral-free and backed by a government credit guarantee fund. Mudra names "salons, beauty parlours" among the service activities it covers. There is no subsidy: you repay the full amount with interest.

• Collateral: none for Mudra loans up to ₹20 lakh, under RBI norms.
• Interest: set by each bank within RBI's rules. Compare quotes; rates and processing fees differ from bank to bank.
• Where to apply: any commercial bank, regional rural bank, small finance bank, or NBFC or microfinance lender that offers Mudra loans, or online through the Udyamimitra portal or JanSamarth.
• How long: Mudra's FAQ puts the usual turnaround for Shishu loans at 7 to 10 days.
• Mudra Card: a RuPay debit card on the working-capital part of the loan, useful for product purchases before the wedding season.
• PAN: Mudra's FAQ says a PAN card isn't compulsory for a Mudra loan; your bank may still ask for it.

#Can a salon get a PMEGP subsidy?

Yes, for a new salon, beauty parlour or barber shop with some capital spending in it. PMEGP gives a margin-money subsidy on a bank loan, through KVIC, the state Khadi boards and the district industries centres. The official PMEGP site lists both a beauty parlour and a barber shop among its sample project reports.

The rules that matter for a salon:

• Project cost up to ₹20 lakh for service units. The bank can lend above that, but the subsidy is worked out on ₹20 lakh at most.
• New units only. An existing salon can't use PMEGP to expand, and neither can a unit that has had a government subsidy under another scheme. Only one person per family (you and your spouse) can benefit.
• Capital spending is required. A project made up only of working capital isn't eligible. For service units, working capital can be at most 60% of the project cost.
• Premises: land can't be included, but the rent of a rented shop can be counted in the project cost for up to three years.
• Education: for service projects above ₹5 lakh, you must have passed class VIII.
• Training: no EDP training is needed for projects up to ₹2 lakh; at least 5 days up to ₹5 lakh and 10 days above that, with an online option. You need the EDP certificate before the subsidy is released.
• Repayment: normal interest, repaid over 3 to 7 years after a moratorium set by the bank.
• Udyam registration is required before the unit is physically verified.

PMEGP was approved up to 2025-26. The government's 28 October 2026 release reports units being supported under it in 2026-27, so it is still sanctioning; check the current guidelines with your district industries centre or the PMEGP portal before you apply.

How long PMEGP takes

The guidelines set a timeline for each step, and together they add up to two or three months before the money is released, before any real-world delays:

1. You apply online with your project report, Aadhaar and certificates, and choose your preferred banks.
2. The implementing agency contacts you within five working days and scores the application; it needs 50 out of 100 up to ₹10 lakh, and 60 above that.
3. The agency forwards it to the bank, within three weeks at most.
4. The bank sanctions or rejects it within 30 days of receiving it.
5. You deposit your own contribution and submit the EDP certificate within 30 working days of sanction.
6. The bank releases the first instalment and claims the subsidy, which goes into the three-year deposit.

Start the online EDP training as soon as you apply; it is the step owners most often leave until after sanction.

#What happened to Stand-Up India?

Stand-Up India, which offered bank loans of ₹10 lakh to ₹1 crore for a first venture by an SC, ST or woman entrepreneur, ran until 31 March 2025, according to the Department of Financial Services. Its own FAQ answered a woman who wanted to open a beauty parlour: she was eligible if the loan fell between ₹10 lakh and ₹1 crore. In March 2026 the Finance Minister said the scheme was being redrafted. As of 31 October 2026, we found no approval of the new version.

The Stand-Up India portal still describes the scheme, so ask your bank branch or the Lead District Manager whether new loans are being sanctioned before you build a plan around it. The Budget for 2025-26 also announced a term-loan scheme of up to ₹2 crore for 5 lakh first-time women, SC and ST entrepreneurs; we found no launch of it either.

#How does CGTMSE help a salon borrow?

CGTMSE is a credit guarantee, not a loan. The bank pays an annual fee to the CGTMSE trust, which guarantees most of the loan, so the bank can lend to a small business without collateral. Since 1 April 2025 it covers loans up to ₹10 crore from banks, with lower caps for some other lenders. You don't apply to CGTMSE; you ask your bank to cover your loan under it. Service businesses are eligible, and the borrower needs Udyam registration.

The fee is charged on the guaranteed amount in the first year and on the outstanding balance after that. The standard rate is 0.37% a year up to ₹10 lakh and 0.55% for ₹10 lakh to ₹50 lakh, with 10% off for women and SC/ST entrepreneurs; a bank with a weaker loan book can be charged more. The scheme lets the bank recover the fee from you. On a ₹30 lakh loan at the standard rate, that is about ₹16,500 in the first year, or ₹15,000 for a woman-owned salon. Count it as part of the loan's cost.

#Is there a scheme for barbers?

Yes. PM Vishwakarma lists "Barber (Naai)" as one of its 18 trades, for self-employed artisans in a family-based trade in the informal sector. It runs to 2027-28.

• Loans: a first loan of up to ₹1 lakh, repayable over 18 months, and a second of up to ₹2 lakh over 30 months, without collateral, at a 5% interest rate. The second needs the first repaid and either digital transactions or advanced training.
• Toolkit: an incentive of up to ₹15,000, as an e-voucher.
• Training: 5 to 7 days of basic training, with a stipend of ₹500 a day.
• Who can't apply: anyone who has taken a PMEGP, PM SVANidhi or Mudra loan in the past five years (unless a Mudra or SVANidhi loan has been fully repaid), government employees and their families, and more than one member of a family.

The scheme is written for a barber working with his own hands. Whether the owner of a salon with several employees qualifies isn't clear from the guidelines. Beauticians and parlour owners aren't a listed trade.

#What are your rights when you borrow from a bank?

RBI's rules give a small business borrower more protection than many owners realise. Almost every salon is a micro enterprise: since 1 April 2025, that means investment in plant and equipment up to ₹2.5 crore and turnover up to ₹10 crore. Know these before you walk into a branch:

• No collateral up to ₹20 lakh. For loans to micro and small enterprises sanctioned or renewed on or after 1 April 2026, scheduled commercial banks may not take collateral security on loans up to ₹20 lakh. The limit was ₹10 lakh before. Banks may go higher at their discretion, and gold or silver you pledge voluntarily is allowed.
• A decision within 14 working days. For MSE loans up to ₹25 lakh, the bank must decide within 14 working days, and give the reasons in writing if it rejects you.
• A Key Facts Statement before you sign. For MSME term loans sanctioned since 1 October 2024, the lender must give you a Key Facts Statement with the annual percentage rate (APR), which includes all the lender's charges, and the repayment schedule.

#Which option fits your salon?

#How do you write a project report the bank will accept?

Write the report so a branch manager who has never run a salon can see where the money goes, how the salon earns, and how the loan is repaid. Every number needs a basis the bank can check.

The two pages a bank reads first are the means of finance and the repayment check. Show that the salon's cash earnings cover the EMI with room to spare even in your slow months, not only in an average month. A projection that reaches full chairs in month two tells the bank you haven't run a salon. Our guides to a salon business plan and reading a salon P&L give you the revenue and break-even numbers, and how to open a salon in India covers the fit-out budget.

Salon licences and registrations lists what each registration involves.

#Which red flags should you watch for?

The money in these schemes is real, which is why people try to sell access to it.

• Agents. Mudra's website states that it has engaged no agents or middlemen and tells borrowers to keep away from anyone posing as one. Nobody needs to be paid to "get your file passed".
• Paid Udyam registration. Udyam is free. A website or consultant charging for it is selling you a free government form.
• Messages saying your loan is approved and asking for a fee. A bank's processing fee is shown in its Key Facts Statement and deducted or paid at the bank, not sent to a mobile number.
• "Guaranteed subsidy". A PMEGP subsidy depends on your score, the bank's sanction, your EDP training and physical verification. Nobody can guarantee it.
• Personal-loan apps for a business. They are fast and expensive. Compare the APR in the Key Facts Statement with a bank's.